VOL. 128.

The , financiallinnurie

SATURDAY, MARCH 9 1929. NO. 3324.

'Financial (ChroniclePUBLISHED WEEKLY

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The Financial Situation.As part of the March financing of the U. S. Gov-

ernment, the Secretary of the Treasury, Andrew W.Mellon, has this week made announcement of a newoffering of Treasury certificates of indebtedness andthe most important feature of this offering, whichis for an aggregate of $475,000,000 "or thereabouts,"with a maturity of nine months from March 15, isthe rate of interest which the certificates bear. TheSecretary has deemed it incumbent to fix the rateagain at 43470, the same as in the offering of cer-tificates made last October. It cannot be said thatthe rate is a surprise considering the condition ofthe money market, and yet the fact should not beoverlooked that prior to October last no certificatesbearing so high a rate as 434% had been put out bythe Government since 1921.The rate contrasts sharply, as has been many times

pointed out in these columns, with the much morefavorable rates at which the Government was ableto borrow before the summer of last year, sincewhich time stock speculation has been absorbing anever increasing amount of bank credit, thereby cre-ating the present tension in the money market whichis giving everyone so much concern. In June of lastyear two short-term offerings of Treasury certifi-cates were made, one of the series, running for sixmonths, bearing interest at 4% per annum, and theother, with a maturity of nine months, carrying37/870. In March last year the rate of interest wasonly 31/4% on a nine months issue of certificates for$200,000,000, and 3%% on an issue running for ayear for $360,000,000. In December 1927 the Treas-ury offered $250,000,000 of certificates running fora year at 31/4% interest and in November 1927 it of-fered $400,000,000 of seven months certificates at3i,%.In the interval since last October the Secretary

of the Treasury placed an issue of certificates last

December in amount of $500,000,000 with the ratereduced to 41/470$200,000,000 of the certificatesrunning nine months and $300,000,000 running fora full yearbut it might have been hazardous torepeat that experiment on the present occasion,when call money on the Stock Exchange this veryweek has been commanding 12%.Returning to the 434 rate of last October is simply

taking cognizance of money market conditions.The Secretary is not responsible for these conditionsexcept so far as, by reason of his membership on theFederal Reserve Board, he may have had a hand inprescribing the mistaken policy of the Federal Re-serve in the summer and autumn of 1927 out ofwhich has grown the unfortunate credit conditionwith which the Reserve is now called upon to deal.The Secretary is a firm believer in letting moneymarket conditions govern. It will be recalled thatin August last a proposal came to the Federal Re-serve Board from one of the Clearing House Asso-ciations "recommending preferential discount ratesby Federal Reserve Banks on collateral notes se-cured by Government obligations, the discount ratein each case to be the same as that borne by the se-curity." One of the reasons urged by the ClearingHouse referred to, in support of the proposal of apreferential rate, was the "forthcoming financingby the Treasury Department." This allusion, how-ever, to Treasury financing did not make, as willbe remembered, the slightest appeal to the Secre-tary who had been delegated to speak on behalf ofthe Federal Reserve Board. Mr. Mellon replied withsome spirit, saying: "Under normal peace time con-ditions the Treasury should and does pay the or-dinary market rates for money, the same as anyother borrowers. Moreover, the credit of the UnitedStates Government is so good that there is no oc-casion whatever for attempting by artificial meansto place U. S. Government securities in a favoriteposition as compared with commerce, industry andagriculture."This is sound policy and in the circumstances the

Secretary had no alternative but to fix the rate ata figure high enough to secure the necessary sub-scriptions in the ordinary, normal way. Still, itwould be a mistake not to take note of the fact thatthe financial debauchery, from which the countryis suffering as a result of the mistaken policy of theFederal Reserve is proving costly to the Govern-ment, the same as to every one else. The situationhas now got beyond control and the Federal Reserveis impotent to bring about a correction. At thisjuncture the annual report of the International Ac-ceptance Bank comes to hand containing a refresh-ing discussion of the whole credit situation by PaulM. Warburg, the Chairman of the Board of Direc-tors of the institution. Mr. Warburg makes a keen

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analysis of the existing situation and the causeswhich have brought it about. He speaks with theutmost frankness and does not mince words in ex-pressing his views. He likens the banking mechan-ism to navigation in the air, saying that "in aero-nautics the public is generally inclined to look uponthe art of rising into the air as the sole accomplish-ment. The layman is apt to overlook the fact thatthe mastery of the art of descending is of equal, ifnot greater importance." That is a happy way ofillustrating how banking has been allowed to pro-ceed in this country. "No central banking system,"he goes on to ob..erve, "may safely permit its facili-ties to expand unless it is certain of its determina-tion and ability to bring about contraction whencircumstances require.Continuing the analogy, he expresses the view that

"the Federal Reserve System, pursuing a well con-ceived and far sighted policy, rose to a position ofworld leadership. Yet within the short span of ayear it lost that leadership owing to its failurepromptly and effectively to reverse the engines atthe critical moment." The intimate part which Mr.Warburg played in the early working of the Fed-eral Reserve is well known, as also his profoundknowledge of the subject of banking; and when aman of such attainments expresses himself in theway Mr. Warburg now does, it behooves the wholeworld to give heed. The rest of his remarks, in jus-tice to him, should be quoted in full, as follows, inorder to indicate the views entertained by him andthe courageous way in which they are expressed.

"The rudder then passed into the hands of StockExchange operators, who have now for many monthsgoverned the flow of money, not only in the UnitedStates, but in the principal marts of the world.History, which has a painful way of repeating itself,has taught mankind that speculative over-expansioninvariably ends in over-contraction and distress. Ifa Stock Exchange debauch is quickly arrested byprompt and determined action, it is not too much tohope that a shrinkage of inflated stock prices may bebrought about without seriously affecting the widercircle of general business. If orgies of unrestrainedspeculation are permitted to spread too far, how-ever, the ultimate collapse is certain not only to af-fect the speculators themselves, but also to bringabout a general depression involving the entire coun-try."From the economic lessons taught by the after-

math of the Great War, we learned that the exces-sive creation of money or bank credit without anequivalent production of assets spells inflation. Yetthe public mind does not appear to realize that thecreation of an inflated purchasing power is not amonopoly enjoyed by governments. When we con-sider that the market value of the fifty industrialstocks, the twenty public utility stocks, and thetwenty railway shares, which are used in computingthe Standard Statistics Company's index of theprices of stocks, has grown within two years fromapproximately $17,500,000,000 to $33,000,0000,000,We find an accretion of approximately $15,500,000,-000, an accretion in the majority of cases, quite unre-lated to respective increases in plant, property, orearning power. Yet this stupendous bulge in "value"covers only a limited number of corporations, and itdoes not include bank stocks, or some of the subtlestelements .of inflation incorporated stock pools,called "investment trusts." or does it comprise thegigantic enhancement of real estate values. One canonly leave it to the imagination to guess the amountby which the inflation of values such as these exceedsthe entire war debt of the United States. In order

to grasp the vastness of the sums involved, it may bewell to remember that the total value of our cotton,wheat, and corn crops combined would amount toapproximately $4,000,000,000."There are those who claim that the increase in the

market value of our securities is warranted by theirintrinsic value. One might be more inclined to agreewith that view if the present level of our stocks werenot sustained by a colossal volume of loans carryingunabsorbed securities, of which $6,000,000,000 ofbrokers' loans form only a part, and if the bankingstructure carrying this inflated inverted pyramid didnot rest on a basis of Federal Reserve credit, whichin these last two years has been stretched by an in-crease in the earning assets of about half a billiondollars over what used to be their approximatelynormal size. Conditions such as these recall to ourminds the painful events of the years of 1919-21.Yet the parallelism between that period and the pres-ent does not seem to be properly appreciated by thegeneral public on account of the fact that billions ofdollars poured into the Stock Exchange by domesticcorporations and from across the seas are not re-vealed by the barometer indicating the Federal Re-serve System's condition and because the index doesnot register the same striking rise of commodityprices shown in the inflation period of 1919 to 1920.It should be remembered, however, that in thoseyears there prevailed a shortage of commodities anda passionate demand for them, while at present theworld is craving for the ownership of shares and forthe satisfaction of new wants. Nobody would objectto a fulfillment of these desires so long as the neces-sary funds were provided from savings. But whenthe savings of the masses are deposited as marginsfor Stock Exchange speculations and when the ex-travagant use of funds for speculative purposes ab-sorbs so much of the nation's credit supply that itthreatens to cripple the country's regular business,then there does not seem to be any doubt as to thedirection in which the Federal Reserve Systemought to exercise its influence quickly and force-fully."People who express the fear that increase in the

Federal Reserve Bank's rediscount rates might hurtbusiness overlook the far greater hurt the countrywill have to suffer if their advice to permit the situa-tion "to work itself out" were followed. Moreover,for approximately the last six months we have had,in effect, a bank rate of 7 or 8 per cent; for it is thatrate which during that period has directed the flowof gold to our shores and which has exercised adecisive influence in the fashioning of our domesticrate structure. When commercial paper commands534%, and when bankers' acceptances sell at 5%%,rediscount rates of 41/2% and 5% seem grotesquelyimpotent and out of line. Procrastination in bring-ing such rediscount rates into a proper relation toactualities, hesitation in taking effectual means toreassert the Federal Reserve System's leadership,place a grave responsibility on those in charge of itsadministration. It is true that our inability todevelop a country-wide bill market and our failureto establish on our Stock Exchange a system ofterm-settlement dealings aggravate the difficultiesof our problem. But these defects of our systemrender the need for determined leadership all themore imperative. That the country's banking sys-tem is tossing about today without its helm beingunder the control of its pilots gives cause for deepconcern. Yet the fault does not seem to lie so muchwith the men in charge of it as with the structuraldefect of its administrative organization. Thebanking fraternity would be well advised to antici-pate radical Congressional proposals by taking thelead in seeking the lines along which reform maybe brought about."

This week's Federal Reserve statements are cer-tainly of a character to awaken anew the deepest

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concern. Brokers' loans are again expanding in themost disquieting fashion. The Reserve Banks in ahapless kind of way are seeking to withdraw fundsfrom the market by reducing their holdings of ac-ceptances, while at the same time, the member banksare negativing the operation and rendering it futileby extending their borrowing at the Federal Reserveinstitutions. During the past week, the 12 Reserveinstitutions have further reduced their holdings ofacceptances from $334,075,000 to $304,644,000 andhave also slightly further reduced their holdings ofU. S. Government securities, that is, from $166,400,-000 to $162,964,000, and yet the amount of Reservecredit outstanding as represented by the total ofthe bill and security holdings is somewhat larger,being $1,467,030,000 the present week as against $1,-463,032,000 last week. The explanation of courseis that the member banks have further enlarged theirborrowing at the Reserve institutions, as appearsfrom the fact that the holdings of discounted billsthe present week stand at $989,172,000 against $952,-482,000 last week.And this same thing keeps going on, week after

week. The Federal Reserve is seeking to withdrawfunds in the way stated, while the member banksare nullifying the process by adding to their borrow-ings. Since the beginning of February holdings ofacceptances have been reduced from $435,609,000 to$304,644,000 and holdings of U. S. Government se-curities have been cut from $201,771,000 to $162,-964,000, making a combined reduction of $169,772,-000, but all this has counted for naught since mem-ber bank borrowing has run up from $820,624,000to $989,172,000, with the result that total bill andsecurity holdings for the present week (March 6),at $1,467,030,000 are almost exactly identical withthe total on Jan. 30 at $1,467,039,000.As to brokers' loans, these have increased the past

week in amount of no less than $140,000,000, mak-ing with the $30,000,000 increase of last week, $170,-000,000 for the two weeks together, almost cancel-ing the decrease which took place in the two pre-ceding weeks, following the issuance of the FederalReserve Board's warning against the undue absorp-tion of bank credit in security loans. In other words,the total of brokers' loans the present week at $5,-647,000,000 is only $22,000,000 below the maximumreached o,n Feb. 6, at which time the Reserve Boardwas prompted to issue its warning.To this week's new addition of $140,000,000, loan-

ing under all the different categories has contributed.The loans made for their own account by the re-porting member banks in New York City have risenfrom $1,090,000,000 to $1,117,000,000, the loans foraccount of out-of-town banks from $1,693,000 to $1,-707,000 and the loans "for account of others" from$2,724,000,000 to $2,823,000,000, these loans for ac-count of others having risen, it will be observed,most of all, establishing, it is almost needless to say,another new high record in all time. Where andwhen is the thing going to end?

The stock market has been under pressure mostof the present week. Growing tension in the moneymarket has been one of the main depressing influ-ences, but there have been some others, chief amongwhich has been extensive selling to realize profitsafter the big rise of last week. Call money on Mon-day ruled at 8%, a figure to which the market hasbecome pretty well accustomed, and therefore on

that day the money situation commanded very lit-tle attention. But on Tuesday there was an advanceto 10%, on Wednesday to 12%, and the same figurewas again touched on Thursday with even the chargefor renewals on that day as high as 10%, and withthe renewal charge again 10% on Friday, though inthe afternoon loans were made at 9%. After thebuoyancy on Friday of last week, when the salesfor the day aggregated over 6,000,000 shares, themarket on Saturday proved a disappointment, pricesshowing a reactionary tendency on sales to realizeprofits and some substantial declines in prices oc-curred, though on the other hand there were alsosome further advances, the list as a whole beingmarked by great irregularity.On Monday notable irregularity again character-

ized the dealings, many traders waiting for the in-augural address of President Hoover, in the hopethat this might contain some reference to the creditsituation of an encouraging nature, in which hope,however, they were disappointed. On Tuesday therewas again general selling, on the rise in call loanrates to 10%, and on Wednesday the weakness wasfurther intensified by another advance in the callloan charge, this time to 12%. On Thursday, how-ever, the selling pressure appeared to be greatlyrelieved and a much better tone developed, notwith-standing, the call loan figure again touched 12%,and even the renewal charge was as high as 10%.On that day portions of the losses sustained in theearly days were recovered, though this was by nomeans so of the entire market. In the general up-ward movement not a few stocks established newhigh figures for the year. On Friday the markethad two adverse features to contend against: first,an increase for the week of $140,000,000 in the totalof brokers' loans during the week, and Paul M. War-burg's severe criticism of the excesses of stock specu-lation in his report to the stockholders of the Ameri-can Acceptance Bank, saying that the Federal Re-serve had lost control of the credit situation and thatstock operators were now in control. But after earlyweakness the market again moved upward, with aspectacular rise of 38 points in Radio Corporation,to 445, a new high, the noteworthy feature.Trading has been on a diminishing scale. The

sales last Saturday, at the half day session, on theNew York Stock Exchange were 2,473,480 shares;on Monday they were 4,557,300 shares; on Tuesday4,430,000 shares; on Wednesday 4,486,600 shares;on Thursday only 3,633,460 shares, and on Friday3,945,400 shares. On the New York Curb Marketthe sales last Saturday were 890,500 shares; on Mon-day 1,326,600 shares; on Tuesday 1,245,200 shares;on Wednesday 1,243,900 shares; on Thursday 1,145,-600 shares, and on Friday 1,485,700 shares.Net changes in prices for the week are irregular,

but with some large declines. It will be recalledthat last week the express stocks were conspicuousfor their spectacular up-rushes. This week theyhave lost part of their huge gains. Adams Expressclosed yesterday at 525 against 585 on Friday oflast week and American Express closed at bid 295against 327% the previous Friday. In the chemicalgroup, Allied Chemical & Dye closed at 284 against303 on Friday of last week; Commercial Solventsclosed at 266 against 265%; Davison Chemical at6634 against 62%; Mathieson Alkali (the shares ofwhich are to be split up on the basis of 3 for 1) at195 against 203; Union Carbon & Carbide at 2107/8

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against 2161/2; and E. I. du Pont de Nemours at1811/4 against 188.

General Electric closed yesterday at 237% against249 on Friday of last week; Amer. Tel. & Tel. closedat 2141/2 against 2161/2; National Cash Register at1307/s against 138; Inter'l Tel. & Tel. at 210 against2161/2; Radio Corporation of America at 445 against405; Montgomery Ward & Co. at 1301/2 against139%; Victor Talking Machine at 171 against 1581/4;Wright Aeronautic at 270 against 285; Sears, Roe-buck & Co. at 157 against 1631/2; InternationalNickel at 621/4 against 67; A. M. Byers at 1563/4against 165%; American & Foreign Power at 109against 118; Brooklyn Union Gas at 1781/4 against1891/2; Consol. Gas of N. Y. at 107% against 112%;Columbia Gas & Electric at 1443/4 against 1501/4;Public Service Corporation of N. J. at 843/4 against901/8; American Can at 1201/2 against 123%; TimkenRoller Bearing at 81 against 85%; Warner Bros.Pictures at 118 against 124; Mack Trucks at 108against 110; Yellow Truck & Coach at 41% against44; National Dairy Products at 1297/8 against 131;Western Union Tel. at 2121/2 against 2021/2; West-inghouse Electric & Mfg. at 155 against 1601/2;Johns-Manville at 190 against 211; National BellasHess at 661/2 against 70%; Associated Dry Goods at63% against 631/2; Commonwealth Power at 1307/8against 1351/4; Lambert Co. at 1431/2 against 139;Texas Gulf Sulphur at 72% against 761/4, and Bol-ster Radio at 61 against 657/8.Many of the copper stocks are also lower, though a

few have further advanced. Anaconda Copperzlosed yesterday at 159 against 1511/4 on Friday oflast week; Kennecott Copper at 97 against 91%;Greene-Cananea at 177% against 185; Calumet &Hecla at 56% against 60%; Andes Copper at 631/2against 67; Chile Copper at 1151/2 against 1091/2;Inspiration Copper at 621/2 against 65; Calumet &Arizona at 133 against 1391/2; Granby Consol. Cop-per at 90 against 94%; Amer. Smelting & Rfg. at116% against 122%; U. S. Smelting, Rfg. & Min. at66 against 691/2. In the oil group Atlantic Ref.closed yesterday at 58 against 561/2 on Friday oflast week; Phillips Petroleum at 38 against 39;Texas Corp. at 583/4 against 591%; Richfield Oil at4034 against 43; Marland Oil at 39% against 401/2;Standard Oil of Ind. at 88 against 87%; StandardOil of N. J. at 491/8 against 48%; Standard Oil ofN. Y. at 393/4 against 401/8; and Pure Oil at 247/8against 245/s.The steel stocks have also declined. U. S. Steel

closed yesterday at 1861/4 against 191% on Fridayof last week. Bethlehem Steel closed at 1011/4against 1055/8; Republic Iron & Steel at 94% against95; and Ludlum Steel at 781/8 against 801/2. In themotor group General Motors closed yesterday at811/2 against 833/4 on Friday of last week; Nash Mo-tors at 107 against 111%; Chryslea Corp. at 1091/2against 107; Studebaker Corporation at 877/8against 91; Packard Motor at 1391/4 against 1461/2;Hudson Motor Car at 89% against 891/2, and HuppMotor at 713/4 against 751/8. In the rubber groupGoodyear Tire & Rubber closed yesterday at 132against 1361/2 on Friday of last week; B. F. Good-rich closed at 94 against 971/2, and U. S. Rubber at60 against 581/4 and the pref. at 863/4 against 88.The railroad group has been no exception to the

rule of loss. New York Central closed yesterdayat 191% against 1991/2 on Friday of last week. Del.& Hudson at 1941/4 against 200; Baltimore & Ohio

at 1321/4 against 1311/2; New Haven at 901/2 against941/2; Union Pacific at 2233/4 against 230; CanadianPacific at 246% against 255; Atchison at 200%against 2037/8; Southern Pacific at 1303/8 against134%; Missouri Pacific at 833/4 against 831/2; Kan-sas City Southern at 907/8 against 93%; St. LouisSouthwestern at 109% against 113%; St. Louis.San Francisco at 1151/2 against 1171/2; Missouri-Kansas-Texas at 50% against 53; Rock Island at132 against 1353/4; Great Northern at 111 against110; Northern Pacific at 1091/4 against 1083/4, andChicago Mil. St. Paul & Pac. at 591/4 against 607/8.

The insolvency record for February is even morefavorable as to commercial failures in the UnitedStates for that month, than for January or Decem-ber, although for both of those months improvementin conditions in comparison with earlier reports wasshown. R. G. Dun & Co.'s records indicate 1,965mercantile defaults in the United States during Feb-ruary of this year with total liabilities of $34,035,-772. These figures compare with 2,535 similar in-solvencies in January involving $53,877,145 of in-debtedness, and 2,176 failures in February of lastyear for $45,070,642. The February return this yearis much the best for a number of years past. Com-mercial defaults in the early months of the year arealways heavy, and while there is some reductionfrom January to February, the improvement in 1929is quite noteworthy.Last month's failures were 22.5% fewer in num-

ber than they were in January, whereas a year agothe decrease was 17.7%. Likewise, as to the lia-bilities reported, the February total for this yearshows a decline of 36.8% from January, while thereduction covering the same period in 1928 was only5.5%. Furthermore, last month's insolvencies were10% less than in February 1928, while the Januarydefaults this year were only 4.1% less than the num-ber reported in January 1928. In addition to allof this the indebtedness reported for last month is25.5% under the amount shown a year ago, whilein January this year there was an increase of about12%. Other comparisons make quite as good a show-ing for the month just closed.The improvement for February over a year ago

was mainly ,for the trading classes. There were1,378 failures reported in February in the divisionembracing trading concerns, with total liabilitiesof $17,890,726. These figures compare with 1,581similar defaults in the corresponding month of lastyear, involving a total of $24,951,932, a notable re-duction for this year. In the manufacturing divi-sion on the other hand, February failures this yearshow a small increase, the number 478 comparingwith 468 manufacturing defaults in the same monthof 1928. The liabilities for manufacturing defaultslast month of $11,890,514 compare with $12,751,295a year ago. For agents and brokers there were 109insolvencies in February of this year for $4,254,532against 127 last year involving $7,367,415 of indebt-edness. The improvement that appears for the trad-ing .ection is shown in the returns covering ten ofthe fourteen leading trading classifications intowhich this record is separated. These fourteen divi-sions last month comprised more than 81% of alltrading failures. Much the best showing appearsfor dealers in clothing, insolvencies in that line be-ing greatly reduced in February from those of a yearago. Likewise, in the drug division, there were few.

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er failures this year in February and for a con-siderably smaller indebtedness. Other tradingclasses where the defaults were less this year, in-clude dealers in dry goods, in shoes, furniture, hard-ware, jewelry, and furs and hats.In the large grocery division failures continue nu-

merous and with heavy liabilities, the number lastmonth being only slightly less than a year ago, whilethe indebtedness was much heavier this year. Therewas some increase in February this year in insol-vencies among general stores and for hotels andrestaurants, but the liabilities for each of these twoclasses were less last month than they were a yearago, the reduction as to the latter division beingparticularly heavy. The increase in the number ofmanufacturing defaults last month over Februaryof last year was small. There are only two of themore important divisions, in the record of manufac-turing failures, which show a less satisfactory re-turn for February the present year than for Febru-ary 1928. These were lumber and manufacturers ofclothing. For both of these classes the number ofdefaults was larger this year and there was someincrease in the liabilities, notably as to the lumberclass. There was also a small increase for the divi-sions embracing manufacturers of machinery andtools, for the iron section, which includes foundries,and for printing and engraving. On the other hand,fewer defaults appear for February among most ofthe other manufacturing divisions and among theseare hats, furs and gloves, chemicals, glass and earth-enware and bakers.One explanation for the smaller liabilities report-

ed for February this year as compared with a yearago is the fewer large defaults in that month thisyear and the reduced volume of indebtedness shown.There were 53 insolvencies reported last month,where the liabilities for each failure was $100,000or more, the total of the latter being $11,887,374.In February of last year the number was 58, butthe total indebtedness shown was $18,238,505. Sep-arated by classes the trading division makes a some-what better report, as to the large failures, thanthe manufacturing class, although the amount in-volved for the latter is also considerably less forthis year than for February a year ago.

Securities markets in the important Europeancenters were hesitant and uncertain this week, withthe international financial strain caused by Amer-ican absorption of the world's credit an obviouslydepressing influence. The chief markets in Britain,France and Germany were also affected by currentpolitical developments, Britain facing a generalelection, while in both France and Germany theCabinets have been repeatedly endangered by partystrife. On the London Stock Exchange interest wascentered on the oil issues as the week opened, owingto perplexingly contradictory statements regardingan alleged agreement between Russian and Anglo-American companies. After a fairly bright opening,the oils reacted. The industrials generally wereflat and British funds also were dull. The toneTuesday was listless, with only a few b sues standingout in the small trading. The gilt-edged marketremained depressed by the fear of dearer money. Agold influx brought a measure of improvement to thegilt-edged list Wednesday. Tobacco and shippingshares also gained, but with these exceptions declineswere general. A weakening of sterling again caused

depression in British funds Thursday. Tradingotherwise was more active, with the long-neglectediron and steel shares suddenly coming in for a gooddeal of activity on a rising scale of prices. Textileissues joined in this movement. Although the gilt-edged division was again dull yesterday, the marketas a whole was cheerful with leading industrials ingood demand.The Paris Bourse had one of its traditionally dull

and depressed openings Monday, offers bringing noresponse and quotations declining generally. Bankstocks were especially weak. Some improvementoccurred Tuesday, but not on a scale to lend greatencouragement to speculators. Bank shares andState securities recovered only a part of their lossesof the previous day. Trading remained limited.Another dull session was reported Wednesday, withthe Bourse apparently preoccupied with the possibil-ity of increases in the London and New York bankrates. The price trend was irregular, a good deal ofselling at the close following a rather firm tendencyearlier in the day. A religious holiday kept at-tendance at the Bourse down Thursday, and thesituation showed little improvement. Trading wasso small that quotations showed no marked varia-tions. In yesterday's session, trading was again ata low ebb, with price changes negligible. TheBerlin Boerse also opened weak, Monday, withuncertainties regarding the Paris and Genevaconferences and the international money situ-ation exercising a depressing effect all day.Only in a few issues was there any rallying tendency.Trading remained restricted Tuesday, with thegeneral trend still downward. After further lossesat the opening Wednesday, some improvement oc-curred, with Reichsbank shares leading the upturn.The better tendency became more pronouncedThursday, and many issues advanced materiallyover the opening prices. Improved sentiment re-garding the several international conferences con-tributed to the gains. The improvement was main-tained in yesterday's session, prices holding well.

The Experts' Committee on German Reparationswhich assembled in Paris Feb. 11 in order to studymeans of revising or completing the Dawes Plan,continued this week its consideration of the delicatequestions involved. There were again few plenarysessions in this, the fourth week of the meeting of ex-perts, most of the details having been delegated tothree subcommittees which were formed in the sec-ond and third weeks at the instance of the Chair-man, Owen D. Young. A degree of impatience wasexpressed in some t.ections of the European pressthis week at the seemingly slow progress of the Ex-perts' Committee, but in most quarters it was re-called that Mr. Young had predicted a need for twoto three months' study before a final report couldbe drafted. The full committee met Monday morn-ing in order to hear the reports of the three sub-committees. After these were heard a proposal wasmade by the chairman that the conference direct itsefforts toward the creation of a central organismin the form of an international corporate body whichwould take the place of the Reparations Commis-sion and the Dawes Plan organization. The reportsof the subcommittees were approved and it was de-cided, according to a Paris dispatch to the NewYork Times, that each subcommittee should continueits labors in the light of Mr. Young's proposal. the

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work to be correlated in a general recommendationto be submitted to another plenary session Wednes-day.The most formal and important of the subcom-

mittee reports submitted at the plenary session onMonday was that of Lord Revelstoke, relating to theproposal for commercialization of the reparationsobligations and the flotation of German bonds onthe international market. The report was writtenand a copy was distributed to each delegate, so thatLord Revelstoke's address to the gathering consistedof comments upon and explanations of the docu-ment. There was no mention of the amount ofbonds to be floated nor of dates at which they mightbe issued. There were also other omissions whichLord Revelstoke is said to have explained as due tothe fact that his subcommittee was not fully in-formed as to the conclusions of the other committees.The report of the "steering subcommittee" was ren-dered orally by Sir Josiah Stamp, the chairman, andwas quickly adopted by the full committee. Thethird report, made by Thomas Nelson Perkins onbehalf of the committee which is concerned withdeliveries in kind, also was adopted. It was fre-quently emphasized in dispatches that the mostdifficult point of all, that of the amount and numberof German annuities, had so far been avoided by thedelegates, but that some figures would soon have tobe named in order to enable the committee to proceedwith its discussions.Sir Josiah Stamp undertook the task of correlat-

ing the work of the subcommittees and laying beforethe full body a draft report of all the work so far(lone. He had intended, reports said, to draw up a"skeleton plan" of what may possibly be the finalreport, and submit it Wednesday for discussion at aplenary session. The difficulties encountered weresuch, however, that Sir Josiah could make only anoral report Wednesday. It was indicated that aplan had been developed in the meantime, ap-parently by the Revelstoke subeommittee of whichJ. P. Morgan and Thomas W. Lamont are members,dealing with the proposed establishment of a hugeinternational banking institution to take over allfunctions connected with reparations payments.This plan, according to the corespondent of the NewYork Herald Tribune, also included means forstimulating Germany's exports in order to assurethe Reich of a favorable balance of trade over aconsiderable period of years. The report was de-scribed as still in its initial stages, and after addi-tional suggestions made in the course of the plenarysession, it was referred back to its authors forfurther consideration. The problem faced by thebody of experts was summed up on Wednesday bySir Josiah Stamp at a gathering of Anglo-Americannewspaper correspondents, a dispatch to the NewYork Times said. "There are three sides to theProblempolitical, financial and economic," SirJosiah remarked. "And as soon as weor anyoneelsehave finished with one aspect another bobsup. It is impossible for any one to take account ofall three at the same time and it is not in theprovince of the experts to do so. They are tryingsimply to find a solution for the political aspectand part of the financial one. They are all awareevery moment that the economic aspect may anyday within the next sixty years upset all theircalculations."

Mexico was plunged into a ferment last Saturdayby concerted military uprisings In three widelyseparated areas of the country which had for theirobject the overthrow of the Federal Government atMexico City. As in previous insurrections in Mex-ico in recent years, the present one was engineeredby disaffected chiefs of military operations incharge of bodies of Federal troops. Although thesoldiery involved in the present instance is not be-lieved to exceed 10,000, out of the total of 60,000Federal troops, the revolt is conceded to be the mostserious of the past six years, exceeding in serious-ness the Gomez-Serrano insurrection of 1927. Firstreports from Mexico City last Sunday indicated thatalmost the entire State of Vera Cruz was in thehands of rebel troops under General Jesus MariaAguirre. Traffic over the railway from MexicoCity to Vera Cruz was suspended. In the northwest-ern State of Sonora, General Francisco Manzo alsorevolted. The revolutionists claimed also the Statesof Chihuahua, Durango, Nayarit, Jalisco, Coahuilaand Sinaloa. President Portes Gil promptly an-nounced the appointment of former President Plu-tarco Elias Calles as Secretary of War to handle theemergency. Ambassador Morrow, who was at hiscountry home in the suburb of Cuernavaca, returnedto the capital, Monday.

President Portes Gil admitted Monday in anofficial statement that three of the nine Statesclaimed by rebel leaders had joined the movement.General J. Gonzalo Escobar, commander of the Fed-eral troops in Coahuila, had gone over to the rebels,it was conceded. The statement charged the rebel-lious generals with fomenting revolution for "noth-ing more than the idea of personal gain." A columnof troops was quickly sent against General Aguirrein Vera Cruz and a censorship was established on allpress reports. General Topete, Governor of theState of Sonora, declared the Federal religious lawsabolished in his State, and reports indicated thatservices were rapidly resumed in the Catholicchurches, for the first time since they were orderedclosed in 1926. By Tuesday, the capital was cut offfrom train service to the border, with several hun-dred American tourists there. Telegraph lines con-tinued to function. It was indicated in WashingtonTuesday that the first official act of PresidentHoover was to decide on a continuation of the Cool-idge policies of giving moral and material supportto the Federal Government in Mexico in theemergency. The first blood in the rebellion was shedTuesday, General Escobar reporting the capture ofMonterey, third largest city in the country, after 10hours of fighting in which Federal losses were"considerable." Rebel troops from Sonora werereported in Sinaloa, on the march southward alongthe West Coast.The tide of battle quickly turned in the sections of

the country nearer the capital. It was officiallyannounced Wednesday that the important city ofMonterey had been evacuated by General Escobarbefore the advance of five columns of Federal troops.which were converging on the city. General Escobarfled to Saltillo, and then, according to the announce-ment, fled from that city with the Federals inpursuit. The Government also declared that morethan half of the troops of General Aguirre, the rebelleader in Vera Cruz, had mutinied against him, andit was asserted that loyal troops would reoccupy thecity within a few days. The situation was not so

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favorable to the Government in the north, however,General Manz consolidating his position in Sonoraand sending reinforcements to revolutionists alongthe border. Optimistic dispatches were received inWashington Wednesday from Ambassador Morrow,and Washington reports indicated that the Mex-ican Government had arranged through the StateDepartment for a sizeable shipment of munitionsfrom a private factory. Vera Cruz was retaken bythe Federal troops on the same day, while in thefar north, a pitched battle developed for control ofthe important border city of Juarez, opposite ElPaso, Tex. Rebel leaders at Nogales, Sonora, de-clared Thursday that they had control of the entireState of Sinaloa, and that they were engaged in adrive toward Mexico City. To the south, Federalforces completely occupied the city of Vera Cruzand its environs and began to pacify the surround-ing State.Foremost among the developments yesterday was

the capture of Juarez by superior Rebel forces, bul-lets falling on United States soil and killing a child.At the instance of U. S. Army officers, truce wasdeclared between the factions struggling for Juarez,and the Federals were transferred to the U. S. sideof the border and interned. In Washington an em-bargo was declared on commercial airplanes to Mex-ico. Mexico City reported that an army of 10,000Federals had begun an advance on Sonora to engagethe fo ces of General Manz.

Ratification of the Kellogg Treatyrenouncingwar as an instrument of national policy was an-nounced by several governments in the past week,bringing appreciably nearer the day when the pactwill be made generally effective. The treaty willcome into force among the fifteen originalsignatories only after acceptance by each of theParliaments concerned. France accepted the treatyon March 1, the Chamber of Deputies voting 570 to12 for ratification after several days of oratory. Aplea for ratification was made in the Chamber onPeb. 28 by M. Joseph Paul-Boncour, who spoke aspresident of the Commission of Foreign Affairs ofthe Chamber. Foreign Minister Aristide Briand,co-author with Secretary Kellogg of the pact, ad-dressed the Chamber on the following day. "I mustadmit in all humility that the Treaty is not perfect,"he said. "It is a human effort, and, like all effortsof humanity, it is full of imperfections. Yet it marksindisputably, progress on the road to peace." If thetime had been spent trying to patch up all the holesand fill up all the omissions, nothing would havebeen done, M. Briand said, and he declared thepact's simplicity was its strength. "I do not think,"he added, "that moral force is all that is needed forthe protection of peace, but it is by no meansnegligible and it gives us new ground and new hopefor a continuance of the work of organization." Inthe balloting which followed, only eleven Com-munists and one Royalist voted against the treaty.Announcement was made on the same day that Hol-land and Denmark had formally ratified thetreaty.It was made known last week that Secretary Kel-

logg had hoped to secure ratifications from all ofthe fourteen other original signatories in time forbringing the pact into effect during the CoolidgeAdminis tration. This hope remained unfulfilled,as four States among the original signatories

France, Japan, Belgium and Polandhave eithernot yet ratified the pact or else ratified it at toolate a date to be able to deposit their instrumentsof ratification at the State Department before March4. Ratifications of eleven of the original signatorieswere, however, deposited by the respective envoys ina colorful ceremony March 2. Coincident with theassembling of the envoys in the Diplomatic Roomof the State Department, Secretary Kellogg receiveda message from Sir Austen Chamberlain, ForeignSecretary of Britain, congratulating him on thecompletion of "this great act with which your namewill ever be associated." Secretary Kellogg alsomade public a communication he had dispatched toForeign Minister Aristide Briand of France inwhich he recalled that he and M. Briand had been"closely associated in our efforts to bring it intobeing." At the ceremony, Mr. Kellogg deposited theofficial ratification of the United States Govern-ment. Sir Esme Howard, the British Ambassador,represented Great Britain, Australia, New Zealand,South Africa and India. The other envoys were:Ambassador von Prittwitz of Germany, Ambassadorde Martino of Italy, Minister Massey of Canada,Minister Veveska of Czechoslovakia, and Charged'Affaires MacAuley of the Irish Free State.

Active steps in furtherance of the acknowledgeddesire of the United States Government forparticipation in the World Court were promptlytaken by former Secretary of State Elihu Root, afterhis arrival in Geneva March 1. The distinguishedAmerican sailed from New York for Europe only afew days before Secretary of State Kellogg addressedidentic notes to all governments which have adheredto the World Court protocol suggesting that a form-ula be evolved which would permit of Americanparticipation. Mr. Root explained when leavingthis city that he would represent only his ownopinions at the meeting of international jurists inGeneva March 11, which will consider revision of thestatute which created the World Court in 1920.This statement he repeated in Geneva last Satur-day, adding that he was acting only as a privatecitizen chosen by the League to attend the meetingof jurists. It became known, however, an AssociatedPress dispatch said, that he had brought to Genevasome clearly defined ideas for an understanding onthe second part of the Senate's fifth reservation,which Secretary Kellogg described in his note ofFe'.. 19 as the only point on which there is any sub-stantial difference of opinion.In an informal meeting with Foreign Minister

Briand of France, Tuesday, Mr. Root discussed theproblem of finding a formula which would permitof American participation in the World Court. Itwas definitely stated in a Geneva dispatch of thesame date to the New York Times that Mr. Root"brought with him a written, if tentative, proposalfor settling the difficulty." Although a purelyprivate document, this was said to meet in itsgeneral terms with the approval of PresidentHoover, Secretary Kellogg, and prominent Senators.The gist of the tentative proposal is, the dispatchsaid, "to take the emphasis off the broad, abstractterms used in the fifth reservation, which Courtmembers objected to as too vague, by providingmeansof defining these terms whenever a concrete casearises!' Mr. Root was further said to have sub-mitted a written draft of this proposal to Sir Eric

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1450 FINANCIAL CHRONICLE [VoL. 128.

Drummond, Secretary General of the League of Na-tions, who circulated it unofficially among thegovernments concerned.More specifically, it was explained that Mr. Root's

proposals are based "on the belief that the Senatedid not desire to reserve the right for the UnitedStates to intervene on all sorts of questions in whichit could be said to have an 'interest,' but merely tosafeguard the United States on advisory opinionstouching quite definite interests, such as issues af-fecting the Monroe Doctrine or immigration. Inother words, a possible conflict between the UnitedStates and the League of Nations on advisoryopinions, which has been so stressed, is unlikelyoften to arise in actual practice. The Root proposaldrops abstract methods by concentrating on thelimited but real interests at stake, and removes ex-isting uncertainty by providing a means of definingthe term 'interest' whenever it arose in a specificcase. It would do this by providing for an im-mediate interchange of views between Washingtonand the League whenever a question of asking forthe Courts' advisory opinion came before the Councilof the League."Four possibilities then arise: First, in a great

majority of the cases it is expected that the UnitedStates will advise the Council that it does not claimany interest; Second, in some cases negotiationscould result in the Council reframing the questionput to the Court so as to include everything it wasdesired to know, while safeguarding the interestsof the United States; Third, in other cases theUnited States might decide that the interest it hadin the question was outweighed by the greater in-terest of having a court ruling on the point; Fourth,in the event of failure of the United States and theLeague to agree on a specific, fundamental case, theplan provides in advance for Washington to exercisethe right of withdrawal from the Court, it beingfurther stipulated that the United States did notintend such withdrawal as an unfriendly action.As for the machinery for the above exchange ofviews, the present procedure already provides thatthe Council must notify the United States, as one ofthe original signers of the Covenant, of any con-templated request for the Court's advisory opinion.All that remains to do is to decide the best methodof facilitating this consultation, whether by directcommunication with Washington or by the UnitedStates delegating a representative to state its viewsto the Council whenever an advisory opinion cameup. Probably an attempt will be made to work outthe latter method."

These proposals, it appears, are to go either form-ally or informally before the committee of jurists,of which Mr. Root is a member, at their meetingon March 11. Any mutually satisfactory formulathat may be worked out will take the form, it isindicated, either of a new protocol or a revisedstatute, which then would go to all members, includ-ing the United States, for acceptance. Every indica-tion was given in Geneva that the proposals will bemost sympathetically considered. The question wasraised, however, in the interest of the League andCourt whether the United States can have privilegeswhich may well be demanded by other non-membersof the League Council. "It is remarked that theother countries, for example. Rip sia or Mexico,might ask for a similar prerogative." an AssociatedPress dispatch said. Notwithstanding such con-

sideration, there was general agreement that theproposal was a practical one as a basis of discussionwhich left little doubt that an agreement could bereached. The text of the proposal was made publicin Geneva Wednesday under the title, "A suggestedredraft of Article IV of the Protocol of 1926." Theprotocol which it is proposed to redraft was drawnup by representatives of World Court members,Article IV providing for an understanding betweenthe League Council and the United States on theway in which American consent would be exercisedon World Court advisory opinion. It was pointedout in Geneva as one of the greatest merits of Mr.Root's redraft of Article IV that it meets the UnitedStates reservations relative to advisory opinionsby the Court, without obliging the League to decidein advance whether a majority or unanimous voteof the Council and Assembly would be necessarywhen asking the Court's advice. This was theprincipal stumbling block of the 1926 conference,when the protocol was drafted, as the signatorieswere unwilling to decide whether a majority orunanimous vote would be necessary.

The Council of the League of Nations assembledin Geneva Monday for its fifty-fourth quarterly ses-sion under the presidency of Signor Scialoja, ofItaly, with the question of minorities the most im-portant item on its agenda. At the previous sessionthis question caused a heated altercation betweenDr. Gustav Stresemann of Germany, and ForeignMinister Zaleski, of Poland. The latter had dep-recated protests against Polish treatment made byGerman minorities in Polish Silesia, whereupon Dr.Stresemann sprang to the defense of the Germanswith a vigor that nearly caused an open rupture inthe fifty-third session of the Council. A demandwas made by the German Foreign Minister for adefinite stand by the League on the minority ques-tion in general, and the matter was placed on theagenda for consideration in the present session. Thefirst meeting of the session, Monday, was a verybrief one in which a number of less important itemswere considered and disposed of. Dispatches fromGeneva indicated that private efforts were made bythe Council members during the rest of the (lay inan endeavor to insure calm consideration of theinflammable minorities issue. The question wasscheduled for discussion at a public meeting Tues-day, but this session was suddenly canceled early inthe afternoon of that day, and further private con-ferences were held in order to reconcile the viewsof the German and Polish Ministers, as well as thoseof a number of other members who had given noticeof their intentions to discuss the problem.Preparations for the debate were apparently well

made, as the question finally came up Wednesdayand was debated for nearly six hours in a calmatmosphere from which humor was not absent. Thediscussion was based on a proposal by SenatorDandurand of Canada for enlarging the committeeof three that now deals with the petitions of minor-ities to include all fourteen members of the Council.Senator Dandurancl expressed the belief that minor-ities should have every opportunity to lay com-plaints before the Council, and that the greatestpyblicitv should accompany the entire procedure.Dr. Stresemann delivered a speech in moderateterms in which he did not propose any immediatechanges butt stressed the danger to peace unless the

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Poland enjoyed in 1928 the greatest degree ofprosperity experienced by the country since the war,according to the report for the final quarter of lastyear issued in Warsaw, Monday, by Charles S.Dewey, financial adviser to the 1?olish Governmentand a director of the Bank of Poland. The yearshowed steady improvement, he said, owing to thefundamental stability derived from a balanced na-tional budget, a firm currency and the absence ofdisturbing political issues. Smooth functioning ofthe stabilization loan was reported by Mr. Dewey,tie receipts from customs last year totaling about150,000,000 zlotys ($16,830,000), while the amountrewiired for the stabilization loan is about 17,000,-OGJ zlotys ($1,907,400). Estimated government in-come and expenditures for 1929-30 are well balanced,he adds, the budget being so arranged that part ofthe program for additions to State property may bediscontinued in the event of a decline in the revenuereceipts. The unfavorable trade balance remains theprincipal problem in Poland, the report indicates,imports for 1928 exceeding exports by 851,000,000zlotys. This sum was covered by foreign bankingcredits and foreign loans to municipalities duringthe first nine months of the year. Although a highpoint of imports was reached in 1928, a decliningtendency was noted toward the end of the year. Itmust be expected, however, that Poland will be aborrowing nation for many years to come, the re-port declares. The internal money market stillsuffers from a dearth of credit and an increasedcirculation of long-term bills of exchange. Althoughdeposits in joint stock banks have increasedmarkedly in the past year, the creation of workingcapital through domestic savings has not been keep-ing pace with the growth of production and withthe unsatisfied demand for funds in the moneymarked, the American financial adviser states.

Reports published in the Utrechtsch Dagblad ofHolland, last week, containing the provisions of analleged secret Franco-Belgian min ':ary convention,were utterly discredited over the last week-end andthe stir created throughout Europe by the "revela-tions" quickly died down. Inquiries were made atParis by the Dutch and German A mbasi.adors, andat Brussels by the respective Ministers, and sweep-ing denials were forthcoming from the Foreign Of-fices which were readily accepted at the Hague andBerlin. To allay the public feeling that was still

manifested in the press, official denials were givenout. The texts as published were subjected to rigidexamination and were shown to be impossible insome respects. Among other discrepancies it waspointed out that the minutes of a conference allegedto have been held at Brussels in 1927 bore thesignature of the French Chief-of-Staff, GeneralDebeney. The French officer, however, was neverin Belgium after 1920. A final quietus was put onthe matter last Sunday when one Albert Frank,alias Heine, was arrested in Brussels as theperpetrator of the forgeries. A girl typist employedby Frank to copy out the 'Treaty" brought about hisexposure, and he confessed the crime. Dispatchesindicated that Frank, a former German spy, hadused the text of an old Franco-Russian treaty whichwas published by the Soviet as a model, changingfigures and dates. This document was still in hispossession. The treaty thus fabricated was sold tothe Utrecht journal, according to his own confes-sion.

A final settlement of the Turkish debt problemwas reported in Paris as "practically certain," Mon-day, negotiations to this end having begun ten yearsago. An official communication on the subject wasissued to the French financial press March 4, a Parisdispatch to the New York "Times" said. Accord-ing to this document, the two councils establishedto liquidate Turkish obligations to foreign bond-holders, meeting in joint session, approved withreservations the terms of the Turkish law providingfor initial payments which was ratified by the An-gora Parliament on June 13 1928. The TurkishGovernment was immediately notified of the ac-tion by the councils, the "Times" report said, therequest being made that Angora take steps to meetthe first payments. "In French circles there is somehesitancy to believe this marks the conclusion of thedispute," the dispatch added. "The good-will of theTurkish Government is questioned and criticism isleveled at forces in Turkey said to have placed manyobstacles in the way of a final solution. The Frenchcreditors ask if the approval of the law implies ac-ceptance of the 40% payment plan advanced by Tur-key. To accept such a compromise would, in theiropinion, constitute a dangerous commercial prece-dent, especially since Turkey is not insolvent. Mostof the French creditors maintain that the right toseek a more equitable settlement should not be re-linquished."

There have been no changes this week in the dis-count rates of any of the European central banks.Rates continue at 63/2% in Germany and Austria;6% in Italy; 532%

in Great Britain, Norway andSpain; 5% in Denmark; 43/2% in Holland andSweden; 4% in Belgium, and in France andSwitzerland. London open market discounts forboth short bills and long bills have moved up to53A% against 53j@5 5-16% on Friday of last week.Money on call in London was 478% on Thursdayand 43% yesterday. At Paris open market dig-counts remain at 3 7-16% and in Switzerland at33A%.

The statement of the Bank of England this weekshows a further increase in gold holdings of 573,281raising the total of that item to 151,828,798 asagainst 157.898,057 the same week last year.

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Circulation increased 2,835,000 and a decrease of2,262,000 in reserve therefore resulted. The bankrate of discount remains unchanged at 5327o."Public Deposits" declined 5,684,000 whereas"Other Deposits" increased 7,778,000. The latterincludes "Bankers Account" and "Other Account"which increased 7,143,000 and 635,000 respec-tively Loans on government security increase of1,820,000 and those on other security 2,547,000.'Discounts and Advances" and "Securities" whichmake up "Other Securities" both advanced, theformer 2,026,000 and the latter 521,000. Theproportion of reserve to liability is now 51.69% asagainst 54.70% last week and 38.20% this week ayear ago. Below we show a comparison of thevarious items for several years:

BANK OF ENGLAND'S COMPARATIVE STATEMENT.

1929.Mar. 6.

1928.Mar. 7.

E

1927.Mar. 9.

1926.Mar. 10.

1925.Mar. 11.

Circulation 6355,088,000 135,115,000 137,056,560 141,246.270 124,200.115

Public deposits 8.283,000 8.462,000 16.158,524 16,756,234 13.687.603

Other deposits 101,479,000 102,878.000 103.922,324 102,523.734 110.460,075

Bankers' accounts 64,183,000 ......Other accounts_ _ _ 37.296,000

Governm't securities 44,796,000 31,761.000 31.222,560 39,295.328 40.096,830

Other securities 26,493,010 55,321.000 73,689,766 74,183.023 78,160.435

Disct. & advances 10.379.000Securities 16.114,000

Reserve notes & coin 58,740.000 42 533,000 33.446,466 24.096,262 24.158.987

Coln and bullion .a151,828,798 157,898.057 150,753,026 145,592,532 128,609,102

Proportion of reserveto liabilities 51.69% 38.20% 27.85% 20.21% 194

4%

Bank rate 544% % 5% 5%5%

Includes. beginning with April 29 1925, 27,000.000 gold coin and bullion

Previously held as security for currency notes Issued and which was transferred to the

Bank of England on the British Government's decision to return to gold standard.

b Beginning with the statement for April 29 1925, includes 27.000.000 of Bank

o England notes issued in return for the same amount of gold coin and bullion

held up to that time in redemption account of currency note issue.

The Bank of France, in its statement for the weekending Mar. 2, reports an increase in note circulationof 1,721,000,000 francs, bringing the total up to64,226,465,950 francs, as against 62,505,465,950francs last week and 62,619,465,950 francs twoweeks ago. Creditor current accounts declined1,669,000,000 francs and current accounts and de-posits 999,000,000 francs. Gold holdings increased25,542,529 francs, bills bought abroad 40,000,000francs, advances against securities 142,000,000 francs,while credit balances abroad decreased 64,900,102francs and French commercial bills discounted918,000,000 francs. A comparison of the variousitems of the Bank's return for the past three weeksis shown below:

BANK OF FRANCE'S COMPARATIVE STATEMENT.

Changer.for Week.Francs.

Mar. 2 1929.Francs.

Status as ofFeb. 23 1929.

Francs.Feb. 16 1929.Franca.

Gold holdings- - Inc. 25,542,529 34,163,146.745 34,037.604,216 34.026.594.689

Credit bats. abed.Dee. 64,900,102 11.473,970.667 11,538.870,769 11.794,958,234

French commercialbills discounted_ Deo. 918,000,000 6,124,061,281 7,042,061,281 5,776,0

61,281

Bills bought abed_Ino. 40,000.000 18,326,970,680 18,286.970,680 18,280.970,680

Adv. agt. secure. .me. 142,000,000 2,408,091,022 2,263.091,022 2,325.0411,022

Note circulation. _Inc.1.721.000.00064,226,465,950 62.505,465,950 62.619.465,950

Cred. curr. accts. Dec.1,669.000.000 17,805.735.843 19.474,735,843 18,683.735,843

Ourr. mats & deP.Deo. 999,000,000 5,885,493.363 6,884,493.363 5,700.493,363

The Bank of Germany, in its statement for thefourth week of February, reports an increase in notecirculation of 650,932,000 marks, raising the totalto 4,553,026,000 marks as against 4,268,220,000marks last year and 3,465,227,000 marks the yearbefore. Other daily maturing obligations dropped47,136,000 marks while other liabilities rose 13,641,-000 marks. On the asset side bills of exchange andchecks increased 417,569,000 marks and advances258,780,000 marks. Gold and bullion decreased29,000 marks, reserve in foreign currency 8,740,000marks, silver and other coin 17,823,000 marks, noteson other German banks 21,571,000 marks, while

deposits abroad and investments remained un-changed. Below we give a comparison of theBank's return for the past three years:

REICHSBANK'S COMPARATIVE STATEMENT.

Changes forWeek. Feb. 28 1929. Feb. 29 1928. Feb.28 1927.

Assets Reichsrnarks. Retchsmarks. Reichsmarks, Reichsmark:.

Gold and bullion Dec. 29.000 2.728,933,000 1,888,350.000 1,833,867.000

Of which demos. abr'd Unchanged 85,626,000 85.626,000 93.007,000Res've in torn cur% ec. 8,740,000 90,394,000 281,953,000 203,933,000

Bills of exch. & c-acks Inc. 417.569.000 1,888,919,000 2,242.275.000 1.643.795,000

Silver and other coin. Dec. 17.823.000 114,352,000 67,666,000 132,477.000

Notes on -th. Ger. bk.. Dec. 21.571,000 7,244,000 7,143,000 8,923.000

Advances In 258.780,000 297,247,000 117.112.000 154,763,000

Investments Unchanged 93,170,000 94,239.000 92,640.000

Other assets_ ..... 14eo. 10.741.000 470.718.000 551,823,010 506,205,000

Notes In rircufatton_Inc. 650,932,000 4,553,026,000 4.268,220,000 3,465,227,000

0th. daily matur. oblig Dec 47,136,000 525,560,000 507,035.000 539.358,000

Other liabilities- Inc. 13,641.001) 171.987,000 221,285,000 212,145,000

The New York money market was again of over-shadowing interest this week, with the rate for callfunds rising sharply to 12%, the highest figure sincethe year-end tightness. Although March is usuallya month of relatively easy conditions in moneymarkets, the trend of rates this week showed everyindication of increasing stringency. Call *loansMonday were 8% throughout, on the Stock Exchange,with a little surplus money traded in the outsidemarket at 732%. Withdrawals by the banks werein excess of $20,000,000. In Tuesday's market anexceptionally strong demand for money developed,with the result that Stock Exchange loans tightenedto 10% after an opening at 8%. Withdrawals ofthe day were approximately $40,000,000. Theenhancement was ascribed in the market to prepara-tions for tax payments and the government financingof March 15. After renewing at 8% Wednesday,four quick jumps of 1% each were effected, bringingthe rate up to 12%. Withdrawals were $20,000,000,and the market remained firm right up to the closewith no evidence of concessions in the Street market.Renewals Thursday were arranged at 10%, and therate was again quickly advanced to 12%. Althoughsome $25,000,000 was withdrawn by the banks,the high rate attracted sufficient out-of-town fundsto cause an overflow into the outside market, where10% was the prevailing figure. The renewal rateyesterday was again 10%, but the tone was slightlyeasier during the day, and in the final hour the figurewas marked down to 9%. Withdrawals werenegligible. Time money was firm all week at 734%for all maturities, with little business reported.The Treasury announcement of an offering of nine-

months certificates of indebtedness at 434% interest,was everywhere pointed to as the best availableindication of the state of the money market. Brokers'loans against stock and bond collateral again rosesubstantially in the weekly statement of the FederalReserve Bank of New York, the increase for theweek ended Wednesday evening amounting to$140,000,000. The monthly statement of the NewYork Stock Exchange for February, publishedearly in the week, reflected the liquidation on theExchange by a decline of $56,618,325. Gold move-ments through the Port of New York for the week

ended Wednesday consisted of imports of $1,597,000and export of $262,000.

Dealing in detail with the call loan rates on theStock Exchange from day to day, all loans on Mon-

day were at 8%, including renewals. On Tuesdaythe renewal rate was 8%, but the rate for new loansadvanced to 10%. On Wednesday after renewalshad been effected at 8% there was an advance to

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MAR. 9 1929.] Fl NA Nri A L R ONTTCLF 1453

12%. On Thursday the renewal rate was markedup to 10% and some new loans were again at 12%.On Friday with the renewal rate still 10% therewas a decline later in the day to 9%. Time loanshave continued at 734% for all maturities from thirtydays to six months, but with the market very dulland virtually no offerings. Commercial paper hasalso continued dull with little or no market. Ratesfor names of choice character maturing in four to sixmonths remain at 532@5%% with little done atthe lower rate. Names less well known command53%@6%, with New England mill paper selling at54%

There has again been no change this week in therates for banks' and bankers' acceptances. Themarket has been fairly active. The posted rates ofthe American Acceptance Council have continuedthroughout the whole week at WI% bid and 51A%asked for bills running 30 days, 5/% bid and 531%asked for bills running 60 And 90 days, 51 2% bidand 5%% asked for 120 days, and 5%% bid and5%% asked for 150 and 180 days. The AcceptanceCouncil no longer gives the rate for call loans securedby acceptances, the rates varying widely. Openmarket rates for acceptances have also remained un-changed as follows:

SPOT DELIVERY.180 Days 150 Days--Bid. Asked. Bid. Asked.

Prime eligible bills 514 53.4 Of WS90 Days 60 DaysBid. Asked. Bid. Asked.

Prime eligible bills 514 514 1544 514

120 DWIBid. Asked.04 6%30 DaysBid Asked153( 514

FOR DELIVERY WITHIN THIRTY DAYS.Eligible members banks 544 bidEligible non-member banks 544 bid

There have been no changes this week in FederalReserve Bank rates. The following is the scheduleof rates now in effect for the various classes of paperat the different Reserve banks:DISCOUNT RATES OF FEDERAL RESERVE BANKS ON ALL CLASSES

AND MATURITIES OF ELIGIBLE PAPER.

Federal Reserve Bank.Rate inEffect onMar. 8.

DateEstablished.

PreviousRate.

Boston New York Philadelphia

July 19 1928July 13 1928July 26 19211

4)4414414

Cleveland Aug. I 1928 414Richmond July 13 1928 43.4Atlanta July 14 1928 414Chicago July II 1928 411Elt. Louis July 19 1928 414Minneapolis 14 Apr. 23 1928 4Kansas City yi June 7 1928 4Dallas Mar. 1 1929 43.'San Francisco yi June 2 1928 4

Sterling exchange has been under pressure through-out the week and ruling lower than last week. Therange this week has been from 4.84M to 4.84 15-16for bankers' sight, compared with 4.84 13-16 to4.85 last week. The range for cable transfers hasbeen from 4.85 1-16 to 4.85 9-32, compared with4.85 3-16 to 4.85 11-32 the previous week. Themain features are unchanged from the past fewweeks and the irregularity and weakness are dueentirely to the high money rates prevailing at NewYork, which exert a severe pull on all the leadingexchanges, including even Canadian, South Ameri-can, and the Japanese. A description of thesterling situation as it exists at present could hardlybe more than a repetition of the review of the courseof the market during the past few weeks. Thisweek's high money at New York has further ac-centuated the pressure on sterling. As frequentlystated, sterling should normally show the beginningof seasonal firmness after the middle of January

and the seasonal factors favoring London shouldcontinue until about the middle of August, but underexisting circumstances, with money rates in NewYork in their present position, all other factorswhich might promote a firmer sterling are sub-merged: No improvement can be looked for in theforeign exchanges until New York money ratesare lower and the difficulties and uncertainties ofthe credit situation here have been resolved. TheBank o England is taking strenuous measures tomake its discount rate effective and is building upits gold position, but the high money market onthis side becomes daily a more formidable obstacleto the Bank's plans. Considerable anxiety existswith regard to the foreign exchange situation; andthe extreme dullness of the market must be at-tributed in large measure to these uncertaintieswhich make it inadvisable for traders to take apositive technical position.

Agitation goes on in England to have the Bankof England lower its rediscount to 5%, while onthe other hand security traders in London expectthat the Bank may be compelled to increase itsrate to probably 6%. In recent weeks the Bankhas increased its gold holdings through open marketpurchases, but has been forced to raise its bidfractionally above its statutory rate in order tosecure the gold, while at the same time pressurehas been exerted through conversations to keepother buyers, especially central banks, from themarket until the Bank of England's requirementsare more nearly satisfied. This week the Bank ofEngland shows an increase in gold holdings of573,281, the total standing at 151,828,798, asof March 6, compared with 157,898,057 a yearago. On Tuesday the Bank of England bought593,300 in gold bars. On Wednesday the Banksold 3,439 in gold bars and on Thursday bought1,618 and exported 2,000 in sovereigns. OnFriday the Bank bought 4,104 in gold bars.At the Port of New York the gold movement for

the week Feb. 28 to March 6 inclusive, as reportedby the Federal Reserve Bank of New York, con-sisted of imports of $1,597,000, of which $1,500,000came from Canada, and $97,000 chiefly from LatinAmerica. The exports were $262,000, of which$200,000 were shipped to Venezuela and $62,000 toGermany. The Reserve Bank reported a decreaseof $2,500,000 in the net change in gold earmarkedfor foreign account. While the Reserve Bank reportsno movement of gold from Argentina to New York,it is known that approximately $5,500,000 is dueto arrive in New York from Buenos Aires by earlyships. The steamship Pan America, due on March12, is bringing $2,000,000, of which $1,000,000 isfor the Banca Commerciale Italiana. The WesternWorld, due on March 28, is bringing $3,500,000,of which $1,250,000 is consigned to Strupp & Co.,$1,000,000 to the German Transatlantic Bank,$750,000 to Chase National Bank, and $500,000 tothe Anglo-South American Bank. Berlin dispatcheson Friday stated that the Reichsbank has sold46,000,000 marks gold to New York.

Canadian exchange continues at a discount, Mon-treal funds ranging this week from 3% to 15-32 of 1%discount, the prevailing rate being 15-32 of 1%. Asnoted, the Federal Reserve Bank reports a shipmentof $1,500,000 from Canada to New York during theweek, but it is believed in order to correct the ex-change gold shipments from Montreal to New York

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1454 FINANCIAL CHRONICLE [VOL. 128.

would have to approximate $60,000,000. It is con-sidered that gold should move freely from Montrealto New York with Canadian quoted at 7-32 of 1%discount. It would seem that the Canadian authori-ties have unofficially reimposed the embargo on goldexports. It seems likely that the Canadian banks arerefusing to undertake gold shipments out of respectto the known wishes of the authorities at Ottawa. Itcan hardly be believed that Canada has even unoffi-cally reimposed the embargo on gold exports, but thetruth lies more probably in the opinion expressed bysome bankers that the banking authorities on thisside of the border are actively supporting the no-goldmovement. The discount on Canadian is, of course,due largely to transfer of Canadian funds to the NewYork market. There is practically no short loanmarket in Canada.

Referring to day-to-day rates, sterling on Saturdaylast was nominal in a dull half-day market. Bankers'sight was 4.84 13-16@4.84 15-16, cable transfers4.85%@4.85 9-32. On Monday the market wasirregular. The range was 4.84 13-16@4.84% forbankers' sight and 4.853@4.85 9-32 for cable trans-fers. On Tuesday sterling continued under pressure.Bankers' sight was 4.84%@4.847A, cable trans-fers 4.85 3-16@4.853. On Wednesday sterling wasweaker. The range was 4.84%@4.84% for bankers'sight and 4.85 3-16@4.853- for cable transfers.On Thursday the pressure continued. The rangewas 4.84 11-16@4.84 13-16 for bankers' sight and4.85 1-16@4.85 3-16 for cable transfers. On Fridaythe range was 4.84N@4.84% for bankers' sightand 4.85 1-16@4.85A for cable transfers. Closingquotations on Friday were 4.84 23-32 for demandand 4.85 3-32 for cable transfers. Commercial sightbills finished at 4.84 11-16; 60-day bills at. 4.79%;90-day bills at 4.77%; documents for payment (60days) at 4.79%, and seven-day grains bills at4.83 11-16. Cotton and grain for payment closedat 4.84 11-16.

The Continental exchanges continue to sufferirregularity and pressure arising from the firmmoney market and unsettled credit situation on thisside. French francs are showing a weaker toneand were it not for the support of the Bank ofFrance through exchange operations, the rate forfrancs would easily drop below 3.903/ for cabletransfers. The Bank of France continues to sellits sight balances abroad for the purpose of sup-porting the franc. This week the bank shows areduction of 65,000,000 francs in these balances.As noted above, the Federal Reserve Bank of NewYork reports a decrease of $2,500,000 in gold ear-marked for foreign account. It is presumed thatthis represents a reduction in the earmarkings ofthe Bank of France. A reduction in earmarked goldis equivalent to an import of gold. Funds arefreely flowing from Paris to Berlin, London andNew York, where interest rates are higher, and ofcourse this militates against French exchange. How-ever, the Bank of France holdings of foreign exchangeare so extensive that the rate can be maintained atwhatever point the French authorities wish for aconsiderable time. If New York money rates holdtoo long around present levels the entire situationwill become so complicated that France as well asmost of the European countries will lose gold toNew York. The New York rates are making them-selves felt in all parts of.the_world.

German marks are again lower and at present quo-tations, around 3.723 for cable transfers, gold mightbe expected to move from Berlin to New York. Thisweek the Federal Reserve Bank of New York reportsanother small shipment of $62,000 in gold to Ger-many. This brings the total of the small shipmentsto $1,459,000 in a period of about 28 weeks. Theyare evidently unrelated to exchange transactions prop-er, as the dollar-mark rate has not justified shipmentsduring the period. Bankers assert that the Reichs-bank is losing control of the money market in Ger-many. Its gold exchange holdings show signs ofshrinking as the result of operations to maintain markexchange and to prevent a drain on its gold supply.Funds have been leaving the German market recentlyand it is thought that the Reichsbank will probablybegin to sell gold before its exchange reserve becomesmuch lower. Otherwise it might be compelled to ex-port gold at an inconvenient juncture. As notedabove in the comments on sterling exchange, Berlindispatches on Friday stated that the Reichsbankhad sold 46,000,000 marks (approximately $11,-000,000) gold to New York, the first sale since 1927.The movement follows the loss of 200,000,000 marksin holdings of foreign exchange caused by the recallingof foreign short loans and by reparation transfers.Italian lire are ruling slightly easier, but for no otherreason than those given which affect the other Conti-nentals. There is a retardation in the flow of funds toItaly from this side and from South American pointsowing to the pull of the New York market. In connec-tion with the Polish exchange, it is of interest to notethe report issued by Charles S. Dewey, financialadviser to Poland on Polish economic conditions.This will be found in another column.The London check rate on Paris closed at 124.23

on Friday of this week, against 124.23 on Friday oflast week. In New York sight bills on the Frenchcentre finished at 3.90 5-16 on Friday, against 3.903/ion Friday a week ago, cable transfers at 3.90 9-16,against 3.90N and commercial sight bills at 3.90against 3.90 1-16. Antwerp belgas finished at 13.88for checks and 13.88% for cable transfers, as against13.883 and 13.89 on Friday of last week. Finalquotations for Berlin marks were 23.71M for checksand 23.723/2 for cable transfers, in comparison with23.72 and 23.73 a week earlier. Italian lire closed at5.23 3-16 for bankers' sight bills and at 5.23 7-16 forcable transfers, as against 5.233/i and 5.23%. Aus-trian schillings closed at 14.05 on Friday of this week,against 14.05 on Friday of last week. Exchange onCzechoslovakia finished at 2.963, against 2.963; onBucharest at 0.5932, against 0.69; on Poland at 11.25,against 11.25 and on Finland at 2.52, against 2.52.Greek exchange closed at 1.293.t for checks and1.293/ for cable transfers, against 1.293 and 10.293/2.

Exchanges on the countries neutral during thewar are practically unchanged in all essential fea-tures from the past few weeks. All of them areinclined to go off in response to the pressure feltby sterling and the leading Continentals. TheScandinavian currencies have been slower to respondto the lower current of exchange than other neutrals,but this week the exchanges of Norway, Denmark,and Sweden have been decidedly easier. Even so,the market has been so dull that the quotations arelargely nominal. There has doubtless been somedrain of funds from these countries to the Londonand Berlin markets, although there is very little

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MAR. 9 1929.] FINANCIAL CHRONICLE 1455

evidence of a demand for dollars in the Scandinaviancentres. Holland guilders have been weak and thecheck rate on Amsterdam this week is quoted belowdollar par, although the cable rate is above dollarparity. Some bankers are of the opinion that notmuch Amsterdam funds are coming to this market.This would hardly seem to be consistent with themagnetic effect of high money rates here. Therecan be no doubt, however, that while money ratesin London and Berlin are below those of New York,they are certainly attracting Dutch funds.The Swiss National Bank has taken steps toward

the adoption of the gold standard for the Swissfranc. The report of the bank recently issued pointsthe impossibility of immediate action, but says thatthe return to the gold basis will be made at theearliest possible time. The bank has adopted arecommendation that a redemption of gold notesbe made at the discretion of the bank either inSwiss gold coin, in gold bars, or in gold exchangeon banks of issue of such countries as permit theexportation of gold. The Bank had gold reserves of$105,500,000 as of Dec. 31 1928, an increase over1927 of $12,000,000. As a consequence of theadoption of gold monometalism, the ecu (silverfive-franc piece) will no longer be legal tender forunlimited amounts as formerly, when it rankedwith gold coin. It will be reduced to the status ofsubsidiary coinage and its size and weight will belessened materially, though it will continue to beminted in silver. A commission of monetary expertswhich has recently been studying the Swiss financialproblems decided against the creation of an issue ofnotes of small denomination (5 and 10 francs) whichhas been widely discussed in Swiss money circles.Spanish pesetas dropped sharply in Monday's tradingas the result of week-end cables from Spain to theeffect that the Spanish Government has definitelywithdrawn its support from the exchange for thetime being. In Friday's trading the rate droppedto a new low of 14.65 for cable transfers.

Bankers' sight on Amsterdam finished on Fridayat 40.03, against 40.033 on Friday of last week;cable transfers at 40.05, against 40.053, and com-mercial sight bills at 39.99, against 40.00. Swissfrancs closed at 19.223 for bankers' sight billsand at 19.233 for cable transfers, in comparisonwith 19.223/i and 19.2334 a week earlier. Copen-hagen checks finished at 26.6334, and cable transfersat 26.65, against 26.653/ and 26.67. Checks onSweden closed at 26.70, and cable transfers at26.7134, against 26.71 and 26.723/2, while checks onNorway finished at 26.6434 and cable transfers at26.66, against 26.66 and 26.6734. Spanish pesetasclosed at 14.69 for checks and 14.70 for cable trans-fers, which compares with 15.29 and 15.30 a weekearlier.

The South American exchanges with the exceptionof Argentine paper pesos show very little change froma week ago. Pesos have been ruling lower, althoughthe export season is well along and labor disturbanceshave practically ceased at the Argentine ports. Therecan be little doubt that the weakness in the peso is dueto some extent to the attractiveness of the New Yorksecurity markets for Buenos Aires funds, as the pres-ent trend, as in the case of other major currencies, isopposite to its normal seasonal course. As notedabove in the discussion of sterling exchange, approxi-mately $5,500,000 in gold has been engaged in Buenos

Aires for New York and is due to arrive here duringMarch. Although there will be considerable opposi-tion on the part of the Argentine banking authoritiesto the shipment of gold, it is believed that the move-ment will grow. Argentine paper pesos closed onFriday at 42.08 for checks, as compared with 42.08on Friday of last week, and at 42.13 for cable trans-fers, against 42.13. Brazilian milreis finished at 11.85for checks and at 11.88 for cable transfers, against11.87 and 11.90. Chilean exchange closed at 1234for checks and 12 3-16 for cable transfers, against12 1-16 and 123/s, and Peru at 4.00 for checks and4.01 for cable transfers, against 4.00 and 4.01.

The Far Eastern exchange is notable this weekfor the further rather sharp decline in Japanese yen.The Chinese quotations have been reasonably steadyowing to the relative steadiness in the price of silver.The decline in yen is considered the result of thedisparity between money rates in New York andTokio. Money is extremely cheap in Japan andowing to continued depression in many lines ofbusiness it is to be expected that the yen will showweakness, while heavy transfers are being madefrom Tokio to New York and London. The weaknessin yen could hardly be arrested under the circum-stances without Government intervention. Thepresent rate brings the yen down to about 53/i centsbelow the old par of 49.85. If the drain continuesJapanese banking authorities will find it a difficulttask to bring the unit back to par and to effectstabilization. Closing quotations for yen checksFriday were 44 7-16(4)44%, against 443j41% onFriday of last week. Hong Kong closed at 483'8@,49 1-16, against 48%@)493'; Shanghai at 62%@623/2, .against 623/20(4)62 11-16; Manila at 49%,against 49k; Singapore at 56%@563/2, against563/2@)56 9-16; Bombay at 3634, against 363/2,and Calcutta at 3634, against 363/2.FOREIGN EXCHANGE RATES CERTIFIED BY FEDERAL RESERVE

BANKS TO TREASURY UNDER TARIFF ACTS OF 1922.MAR. 2 1929 TO MAR.. 8 1929. INCLUSIVE.

Country and MonetaryNoon Buying Rate for Cable Transfers o New York

Mtge Os Craned Slates Money.

Mar. 2. Mar. 4. Mar. 5. Mar. 6. Mar. 7. Mar. 8.

EUROPE.- S $ 8 i II 8Anstsia, schilling -- .140563 340558 .140525 .140494 .140486 .140530Belgium. belga .138861 .138844 .138829 .138805 .138804 .138817Bulgaria, ley 007225 .007204 .007215 .007209 .007204 .007186Czechoslovakia. krOD .029615 .029614 .029612 .029611 .029611 .029607Denmark, krone .266571 .266547 .266534 .266514 .266486 .266439England, pound s

ling .8.52291 .852226 4.851983 4.851809 4331315 4.850598Finland, markka .025168 .025167 .025161 .025166 .025164 .025157France, franc 039064 .039059 .0